# In the matter of Narayan Securities Limited Company Petition No. (IB)-856(ND)-2022

> NCLT judgment dated 2023-07-03. Citation: TCN-2023-NCLT-02726. Globe Capital Market Limited filed a petition under Section 7 of the Insolvency and Bankruptcy…

- **Court:** NCLT
- **Order date:** 3 Jul 2023
- **Citation:** TCN-2023-NCLT-02726
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/narayan-securities-limited-company-petition-no-ib-856nd-2022-68233a9e

## Summary

### Background

Globe Capital Market Limited filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Narayan Securities Limited. The claim arose from an arbitration award dated 24.09.2021, related to currency derivative transactions. Globe Capital Market, acting as a clearing member, sought to recover dues from Narayan Securities, a trading member, for clearing and settlement services. The corporate debtor acknowledged its liability in a reply communication dated 25.07.2022, but expressed its inability to pay the awarded sum.

## Facts

Globe Capital Market Limited (the Applicant), a clearing member, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Narayan Securities Limited (the Respondent), a trading member. The claim was based on an arbitration award dated 24.09.2021, arising from currency derivative transactions. The Applicant and the Respondent had entered into a Trading Member-Clearing Member Agreement on 28.08.2008, and another agreement on 09.03.2017. The Respondent was obligated to pay fees, charges, brokerage, and commission to the Applicant for clearing and settlement services. The Respondent made an 'on account part payment' of Rs. 2.00 Crores on 16.09.2019. The Applicant invoked bank guarantees

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## Issues and analysis

### Issue 1: Whether the debt claimed by the …

**Ratio:** A 'Financial Debt' requires disbursement against the consideration for the time value of

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**Reasoning:** The NCLT referred to the Supreme Court's judgment in 'Dena Bank vs. C. Shivakumar Reddy'

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**Interpretation:** The interpretation of 'Financial Debt' under Section 5(8) of the IBC requires

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**Application:** In this case, the NCLT found that the amount claimed by the Applicant was based

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## Parties

- **Judges:** SH. ASHOK KUMAR…; SH. L. N.…
- **Appellants:** Globe Capital…
- **Respondents:** Narayan Securities…

## Timeline

- **2008-08-28 — Trading Member-Clearing…**: Agreement between Trading Member and Clearing Member (TM-CM Agreement) was executed in…
- **2017-03-09 — Clearing Member-Trading…**: Clearing Member-Trading Member Agreement was executed in writing between Corporate Debtor…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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